A couple of weeks ago, Carnival Cruise Lines cited the Trump administration’s ban on Cuba travel as the reason it was lowering earning estimates. The media and pro-Castro pundits jumped on the claim as proof that Trump’s Cuba policy was hurting American companies.
Now we learn the main reason Carnival cut its earnings estimates is not because of Cuba, but because their European division cannot fill enough cabins (via Travel Weekly):
Carnival Corp. finds itself behind expectations in the second half of 2019 as it tries to mitigate setbacks from a “confluence” of events.
The company told investors on June 20 that weakness in the next six months, especially in business from continental Europe, could mean $242 million less in profits than what was forecast to start the year, a rare second profit reduction in one year for the company.
The biggest single issue is in Europe, specifically with cruises bought by Europeans.
But some of the rest of the weakness will hit closer to home, including the end of Havana as a cruise destination as of June 6 and an Azipod propulsion system malfunction on the Carnival Vista that will sideline it for much of July.
Carnival’s Q2 net income dropped to $451 million, from $561 million in Q2 2018, and CEO Arnold Donald admitted to the potency of the issues during the second-quarter earnings call.
“What’s happening right now is just a confluence of events,” Donald said. “We’ve had them in the past, but we were able to overcome them. This year, the confluence kind of overwhelmed us.”
Other lines also have some troubles, particularly with Cuba, where Carnival’s exposure is relatively lower than that of its two publicly traded counterparts, Royal Caribbean Cruises Ltd. and Norwegian Cruise Line Holdings.
Perhaps Carnival Cruise Lines blamed Trump’s Cuba policy out of spite or they wanted to make a political statement. Regardless of their motivations, it was a stretch from the very beginning. Carnival and all the other cruise lines did quite well before they added Cuba as a destination.
Maybe Carnival should redirect its resources and efforts dedicated to criticizing U.S. policy on Cuba to shoring up their European market. Just saying…
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